Shark Tank's Daymond John: Retailers must 'over-provide' for the customer

Every month brings more brick-and-mortar retailer bankruptcy filings. More than 300 retailers have filed so far this year, including, most prominently, The Limited, Wet Seal, BCBG Max Azria, Payless, Gymboree, and True Religion. The Atlantic called it “the great retail apocalypse of 2017.”

Many of these stores were staples of your local shopping mall just a few years ago.

Warren Buffett put it succinctly at this year’s Berkshire Hathaway annual meeting when he said, “The department store is online now.” His investing partner Charlie Munger added, “It would certainly be unpleasant if we were in the department store business.”

Daymond John, one of the original ‘shark’ investors on ABC’s “Shark Tank,” is a good person to ask about apparel retail chains. He founded the clothing brand Fubu in 1992 and grew it to a $350 million business at its peak.

“Retail is challenging now, no matter what,” John says. “You have to over-provide for the customer. The only thing we’re selling to people, at the end of the day, is time. And if you can save them time, of having to go into a store… then it’s very challenging [for brick-and-mortar stores]. So retail is going to have to create a lifestyle. Macy’s is doing this, they’re transforming Macy’s on 34th Street. It has to become a destination like a Disneyland. That’s what retail has to do to sustain. Other than that, I just want to open up my box or have a drone drop something off at my house.”

Daymond John at the Yahoo Finance All Markets Summit in New York on Feb 8, 2017. (Reuters)

So, then, is the shopping mall basically dead?

“The shopping mall might be dead,” John says. “When we were kids, we used to go out and meet a guy or girl there, find out the new music. It’s all on Instagram now, we don’t need to go there anymore. So, whether it’s a Tesla of the world, or what Abercrombie & Fitch has done, or Apple, you have to create something that people need to go there to touch and experience, something else more than just picking up something on a hanger.”

Apple is the most commonly cited example of a unique in-person shopping experience, and citing Tesla makes sense because of its newness and shine. Abercrombie & Fitch might make less sense—these days the clothing chain is struggling and reportedly fielding takeover interest—but John is talking about Abercrombie in its prime, when cologne seeped out of its stores into the mall and attractive men and women stood outside its doors.